Testimony before the Government Management, Information and Technology Sub-Committee of the House Committee on Government Reform
Illinois Performance Contracting in Child Welfare
Jess McDonald, Director
Wednesday, September 6, 2000
child deserves a stable and lasting family life. This basic principle of permanency, endorsed as
far back as the 1909 White House on the Care of the Dependent Child, has
been a goal of public child welfare systems for most of this century.
But it is only in the last few years that substantial progress has been
made in bringing permanency to the lives of thousands of children who
otherwise would have spent their childhood in foster care.
I am happy to say that Illinois has led the nation in this trend
for the past two years. We
were recognized in both 1998 and 1999 by the White Houses Adoption
2002 Excellence Award for dramatically improving the number of children
moved to permanent homes.
my pleasure to be here today to discuss a program which has played a critical
role in moving Illinois from one of the worst child welfare systems in
the country to one of the bestPerformance Based Contracting.
Our status as finalists for the Ford Foundations Innovations
in Government Award provides Illinois with an important opportunity to
demonstrate how government can be dynamic and smart in responding to the
people it serves.
understand Illinois innovation in contracting for child welfare
services, it is first important to get a sense of the challenges that
faced the states child welfare system during the mid-1990s.
the commitment to permanency is a long-standing one, most states struggled
in the early 1990s to make good on the promise.
Foster care caseloads rose nationwide from 280,000 children in
1986 to 502,000 children in 1996.
There were 6.9 foster children for every 1,000 childrenthe
highest prevalence rate recorded this century.
Illinois, the magnitude of the problem was much greater.
There were 17.1 foster children for every 1,000the highest
prevalence rate in the nation. When
I became Director of the Illinois Department of Children and Family Services
in 1994, tensions were understandably high.
Foster care growth was eating up far more of its fair share of
state revenues. Workloads
of 50 to 60 children per caseworker were commonplace, and there were routine
calls to dismantle the agency.
was obvious that change was long overdue.
the explosive growth in the Illinois foster care system ended in 1997,
stabilization of intake was not enough.
Our read of the situation was that our substitute care system should
have been half its actual size in 1997.
In the course of analyzing our caseload dynamics, we found children
were staying far too long in substitute care.
As a result, the median length of time entering children stayed
in care had lengthened from 8 months in 1986 to 56 months in 1996.
Addressing the permanency backlog became our top priority.
stable placements into legally permanent homes is no simple matter after
years of inattention by the child welfare system.
As with other states, the growth in caseloads brought with it an
expansion of the level of child welfare services provided by the private
sector. With so much of Illinois
child welfare system privatized, the renewed focus on securing permanency
for children posed unique challenges.
Longitudinal data collected by the Department showed that the rate
of children exiting the system fell below the rate of new cases coming
small part of the problem was inherent in Illinois basic contracting
structure. Contracts based
upon a fee-for-child payment can undermine permanency because once the
child welfare issues have been resolved and the child is discharged, an
agency faces losing revenue unless the child is replaced with a new referral.
This dynamic leads to the predictable practice of focusing the
work on maintaining kids in care rather than aggressively pursuing permanency.
Contracts sought to change this on two levels.
First, the contracts made significant investments in activity that
would support permanencyadditional permanency focused staff positions;
resources enabling providers to begin serving children more quickly upon
placement; more resources for supporting children returning home to their
biological parents; and the flexibility to use administrative funds to
support different models of child welfare service provision. Second, and
perhaps most importantly, the contract realigned financial incentives
to secure accountability and reinforce the importance of achieving outcomes
over maintaining children in care.
Agencies were allowed to use superior performance in moving children
to permanency as a way of lowering their caseloads, maintaining their
contract level and financially enhancing their program.
shift was accomplished through redesigning how agencies receive new cases
for placement services. Upon
the implementation of Performance Contracting in Cook County, all agencies
were required to accept 24 percent of their caseload in new referrals.
Added to this was the expectation that all agencies would move
24 percent of their caseload to permanencyan outcome expectation
reflecting a nearly threefold improvement over the then system-wide average
of eight percent.
benefits and potential consequences were immediately apparent to contracted
agencies. By exceeding the
24 percent benchmark in permanency expectations, an agency could secure
caseload reductions without a loss in revenue.
Falling short of the benchmark meant serving more children without
a change in the contract level.
the Trend in Permanency
success of the Performance Contracting initiative is best evaluated using
three important measures: the
rise in adoptions, the rise in subsidized guardianships, and the rise
in over all agency performance levels since the programs implementation.
I mentioned earlier, Illinois success in steadily increasing the
number of finalized adoptions has brought the state a great deal of national
attention. During state fiscal
year 1999, more children were moved to adoption than in the combined previous
seven-year period of 1987 through 1994.
President Clintons Adoption 2002 Initiative has now twice
recognized Illinois as the nations leader in securing adoptions
for children. The stated
goal of this initiative was for states to double the number of completed
adoptions by the year 2002. Illinois
managed to nearly pass this goal just in the first year, increasing the
number of adoptions from 2,229 in state fiscal year 1997 to 4,293 in 1998.
During state fiscal year 1999, Illinois again almost doubled the
previous years performance by finalizing 7,315 adoptions.
Although Illinois posted just over 6,200 adoptions by the close
of the state fiscal year on June 30, 2000, this represents a slight improvement
in the overall adoption rate as the foster care population continues to
shrink. In all three years,
the majority of the increase in adoptions has been realized out of performance
guardianship is a new permanency option in Illinois made possible through
a Title IV-E waiver from the federal government.
The waiver was conceived of and designed to create a permanency
option for relatives committed to the long-term care of children placed
in kinship care. The combined
effect of this permanency option and performance expectations has been
remarkable. During state
fiscal year 1998, 1,276 children were placed permanently with relatives.
During state fiscal year 1999, this number nearly doubled to 2,199
children, with an estimated 1,700 by the end of state fiscal year 2000.
As with adoptions, the majority of these subsidized guardianships
were realized out of performance contracts.
to the implementation of the Performance Contracting initiative in Cook
County relative care, the average permanency rate for agencies was just
6.7 percent. By the end of
state fiscal year 1998, the system-wide average for relative care jumped
to nearly 20 percent, with some agencies achieving results as high as
44 percent. This strong showing
continued into the second year of performance contracting which expanded
to traditional foster care in Cook County, and in a limited way, relative
and traditional care in the rest of the state.
During fiscal year 1999, system-wide performance in Cook County
relative care climbed from 20 percent to nearly 30 percent, while the
permanency rate for traditional foster care climbed from 14 percent to
24 percent. By the end of
state fiscal year 2000, the system-wide average permanency rate for Cook
County relative care contracts continued to improve to 34 percent while
traditional foster care finished at 25 percent.
the implementation of Performance Contracting, the dramatic increase of
children moving to permanency has been nothing less than stunning.
The impact on Illinois caseload alone is amazinga 40
percent decline from a peak of over 51,000 children in care to nearly
30,000 in just three years.
important as these gains are, the single most important accomplishment
of Performance Contracting is the reinvestment made possible through consistent
gains in permanency. These
reinvestments support better service delivery for children and families
in Illinois child welfare system.
For three consecutive years, the Illinois Department of Children
and Family Services has used the savings generated by declining caseloads
in Cook County relative care to fund contracted caseload reductions of
10 percent (state fiscal 2000) and now over 20 percent (state fiscal year
when the Performance Contracting initiative was first launched for Cook
County relative care in July of 1997, caseloads were funded at 25 children
per workerthe highest caseloads in the state.
By the end of the first year of the initiative (state fiscal year
1998) it was possible to lower the contracted caseload from 25 children
per worker to 22 children per worker within existing spending levels.
By the end of the 2000 fiscal year, average caseloads were lowered
to 18 children per workernow the lowest in the state.
These gains were made possible because of two dynamics:
the requirement that non-performing agencies give up contract-level
and caseload; and the slowdown in new cases coming into Cook County for
relative care placement.
this population declines and is concentrated with performing agencies,
the savings from the smaller contracted caseloads of non-performers become
available for reinvestment. The structure of performance contracts allows
capacity to be easily transferred from the worst performing agencies to
the best performing agencies without additional cost. The success of these contracts made what would otherwise be
an expensive and unwarranted move a reality.
Lowering caseloads in this way is an investment in the future that
will continue to support improved work in serving Illinois children
a child welfare system consists of more than just a contracting framework.
Although child welfare financing plays a central role in how service
providers target and secure specific outcomes, they are actors within
a much larger system. Performance
Contracting worked because Illinois had laid important ground work in
making improved performance possible.
state laws had to be changed so that undue hesitancy about terminating
parental rights was removed as a barrier to adoption.
In 1997, the Illinois General Assembly passed comprehensive legislation
(Permanency Initiative), which among other things, eliminated
long-term foster care as a permanency goal, reduced permanency
planning timelines to one-year, and directed the Department to engage
in concurrent planning to help achieve permanency at the earliest opportunity.
is also safe to say that these accomplishments would not be possible without
the partnerships we have been able to forge with the Court. Under the
creative leadership of the Presiding Judge of the Cook County Child Protection
Division, the Cook County Juvenile Court has taken the lead establishing
the legal groundwork for moving Illinois wards into permanent homes.
the Department supported a real partnership with private service providers.
Conversations with providers have consistently emphasized sharing
information on system performance, barriers to improving, and the on-going
challenges inherent in serving a vulnerable population.
By reaching consensus on outcomes and the importance of results,
the Department has been able to steadily turn improved performance into
investments which have supported the very infrastructure of the child
there is clearly more work ahead, I think Performance Contracting highlights
the power in identifying specific outcomes and investing in strategies
which make improvements a reality.
Getting support for this kind of innovation at all levels of government
can only create still greater opportunities for the future.
appreciate this opportunity to talk about our work in Illinois. Thank you for your time.